Announcement: PCA Retirement & Benefits is now Geneva Benefits Group! Learn more about our recent name change here.
Announcement: PCA Retirement & Benefits is now Geneva Benefits Group! Learn more about our recent name change here.
This article may contain references to PCA Retirement & Benefits (RBI), which has since been renamed Geneva Benefits Group. Learn more about our name change here.

Understanding Student Loan Forgiveness for Pastors and Ministry Workers

According to research from the National Association of Evangelicals 30% of American pastors have student loan debt in excess of $36,000. Recent regulatory changes allow employees of churches and religious organizations to have their student loans forgiven. Surprisingly, the steps to apply are straightforward and in many cases, can be completed in about an hour.

Although everyone’s situation is unique, we’ve outlined a scenario of what it looks like for a ministry worker or religious employee to walk through this process.

Pastor Rob is an example. He has been a Teaching Elder (TE) in the PCA for 17 years and like many other pastors, has always been interested in furthering his education. But graduate degrees aren’t cheap, and pastors are not as well-paid as other similarly educated professionals. So, over the years, he accumulated student debt. He is not alone

Thankfully, Pastor Rob’s debt was not excessive. But it lingered, the monthly payments were a drag on his family’s budget, and he resigned himself to slowly paying it off. Then he heard that a federal program designed to ease the burden of student debt for people working in public service jobs had expanded to include religious non-profits, including churches and church related organizations.

Pastor Rob was intrigued. “In the past,” he said, “I investigated this debt relief program and found that I did not qualify because it excluded work for religious organizations. Recently I discovered that the program has been opened up to churches and I was excited to see if I could take advantage of it now.”

It turns out that he, and many other employees of religious organizations, likely can. The reason is that the US Department of Education has recently amended regulations for the Public Service Loan Forgiveness Program (PSLF). Starting July 1, 2021, employees of religious non-profit organizations now qualify for PSLF. That means that employees of churches, religious schools and camps, seminaries, church agencies, etc. can now qualify to have their student loans forgiven. Applicants can qualify for student loan forgiveness, provided that they:

  • Have federal student loans through the Direct Loan Program.
  • Have made 120 payments[1] under a qualifying income-based repayment plan.
  • Have made those payments while working full-time[2] for a qualifying employer.
  • Are employed full-time for a qualifying employer when the application is submitted.[3]

PLEASE NOTE THIS TIME SENSITIVE DEADLINE. Even if they have been making qualified payments, most religious employees have not certified past periods of employment. Others have loans under a non-qualifying program. To meet these circumstances,  a waiver currently in place allows borrowers to consolidate their loans into the Direct Loan Program and retroactively qualify past loan payments, including non-qualifying payments, rendering them qualifying under the PSLF. This waiver expires October 31, 2022.

 

What Steps to Take?

To take advantage of the PSLF, answer the following questions:

  1. Do you currently have Direct Loans? If so, you will need to submit a PSLF form no later than October 31, 2022. You can submit this form through an online PSLF Help Tool.
  2. Do you have a Federal Student Loan that is not a Direct Loan? If so, you will need to submit a consolidation application as soon as possible, and then file a PSLF application by the October 31, 2022 deadline.

How Difficult is the Application Process?

While determining whether employers and loan payments qualify can be complex, the Department of Education has pledged to make the application process smoother and easier for borrowers to navigate. Pastor Rob’s experience lends credence to this. “The whole application process, including confirming that 3 employers were qualified under the program, took me around an hour” he said.

Now he is waiting on a determination.

What if I Need Help?

Our team is here to serve you. We believe the gospel advances and the church thrives as men and women who serve PCA ministries grow spiritually and financially healthy. Relief of student debt can be a major step toward financial health. If you have questions about the PSLF process, our team of Retirement Readiness Advisors will be happy to assist you in any way we can. Please contact us at retirement@genevabenefits.org.

 

[1] In March 2020 a payment waiver went into in effect due to the COVID-19 pandemic. These months still count toward the 120 qualifying payments even if borrowers took advantage of the waiver and made no payments.

[2] Full-time means 30 hours per week or more. Applicants are permitted to combine hours from multiple qualifying employers.

[3] Hours worked for multiple qualifying employers may be combined.

Geneva Benefits Group serves those who serve others, providing practical support for the financial, physical, and mental wellbeing of people who work in full-time ministry.

Geneva offers preparedness and peace of mind with solutions tailored to the needs of ministry leaders and staff.